Spending Money Effectively

It’s all about spending your money wisely and insuring you stay within your means. What purchases are going to give you the greatest return for money spent? How do you know? Actually, it isn’t that hard to figure out. The tricky part is in uderstanding three concepts. First, sometimes saving money really does mean you are saving money. Second, money often needs to be spent in order to make more money. Third (and this is the one most often missed or not understood), there are times where you need to spend a little money in order to not lose a lot of money. Let’s look at a few examples:

1: Saving money can indeed be saving money

I mean, that makes sense, right? Look around at your options. Can you buy the exact same thing from website B for a cheaper price than website A? Then buy it from B! Does the smaller brand have the same quality as the big brand? What it really comes down to is this: if you are getting what you need and aren’t sacrificing on quality, then save your money. Watching for deals and saving coupons also goes a long way in this. Every dollar you save is a dollar which can be invested somewhere else!

2: Spend money to make money

You are probably familiar with this one. Nobody knows you exist? Spending money on advertising suddenly makes a lot of people know you exist. Or at least it should… don’t blindly throw money at advertising; a lot of it won’t give you any return. We can help out if you want advice for the best advertising venues to use with your business.

But what about other investments. Does your employee really need that second monitor? Actually, YES. A second monitor boosts employee performance by up to 30%! You are investing in making your employees more profitable to you. Do you need a brand new computer? That depends on what you have. If your current one is ancient and you’re waiting around all day for it, your time lost could very well cost more than a new computer. If it’s doing a decent job and some exciting new thing just came out, you probably won’t really see a return on the purchase.

3: Spend money so you don’t lose more money

This is where it gets tricky. But let’s look at an example: Say you have a business which contains a decent amount of customer data. You’re going along just fine without any problems but for some reason, your IT guy wants you to purchase a new firewall anyways. How is that going to make you any money? Consider it this way: you might spend a few hundred on the firewall and installation. True, no money gained there. But what happens if you didn’t get that firewall and you were breached? The government looks at how hard you tried to protect yourself. If you aren’t protecting yourself at the same level, or better, as everyone else, the fines are designed to severely punish you to the point of going out of business. If you did get the firewall, you may only have to pay damages. Spending a few hundred in this case could save many thousands.

Other examples in this area include battery backups and data backups. That brand new computer is pretty awesome. It probably warrants being protected. If you connect it to a battery backup, you’re out around $75 – $100 but the computer is safe. Don’t use one and you might find out that your motherboard and processor are completely fried at the next power surge. It’s an investment to insure the computer sticks around many years. How about data backups? Again, you might spend $100 – $200 to get running with backups but how much will it cost you if you don’t have a backup and your hard drive fails? Or gets hit with ransomware (if you’ll remember from our Malware Article, about 50% of business were struck with malware last year)? The cost of backing up your data is nothing compared to the cost of losing your data.